Reload (not upgrade) the OS will make it run like "out of the box". The OS is brought back to a baseline level. You can choose to upgrade parts of it like Facebook app etc.

Installing an OS will overwrite the OS files and layout a new file system. Your old data is probably located at some "free" spaces and could potentially be recovered from the device storage. It doesn't however affect performance or functionality because the OS is unaware of what is stored in the free space, and data will eventually be overwritten with new data. If the device was previously encrypted it's almost impossible to recover anything.

I never wipe my device, but have installed numerous OS via the autoloaders which effectively gets me going from a clean state.